Tag: dubai business lawyers

RESTRUCTURING PROCESS IN UAE

Posted by Al Reyami on July 19, 2020

CORPORATE RESTRUCTURING PROCESS IN UAE | LEGAL GUIDE

Corporate restructuring in the event of bankruptcy or liquidation is a legal means resorted to by companies to significantly modify the operational aspects of the company. This could include financial, technical or organizational changes aimed to correct any operational issues that could led to company’s distressed. Restructuring process is a complex process and solutions must be thoroughly tailored enlisting appropriate guidelines to ensure that specific needs and objectives of the company are addressed fully. Corporate lawyers in Dubai will be able to put together a customized plan of action for you and your company to go through the process smoothly.

UAE Federal Law governing bankruptcy, restructuring and insolvency are embodied primarily under the following legal framework and legislations:
• Federal Law No. 18 of 1993 (the “Commercial Code”)
• Federal Law No. 2 of 2015 (the “Companies Law”)
• Federal Law No. 5 of 1985 (the “Civil Code”)
• Federal Law No. 3 of 1987 (the “Penal Code”)
• Federal Law No. 11 of 1992 (the “Civil Procedures Law”)
• Federal Law No. 10 of 1980 (related provisions concerning bank liquidation and other financial institutions)

Corporate restructuring process often resorted to could be:

BANKRUPTCY PROCEEDING

• Filing of bankruptcy before the court
• Court will appoint expert to determine the veracity of the petition filed
• If the court is satisfied that bankruptcy is an appropriate measure, then the court will adjudicate an order and appoint a trustee to administer the proceeding
• Bankruptcy order will be made available to the Ministry of Economic and relevant Commercial Register and UAE Central Bank
• Bankruptcy adjudication summary will be published is daily newspapers as specified by the court, this must include invitation to the company creditors to have their debts recorded in the bankruptcy and creditors must subsequently submit a statement setting out their claims against the petitioner.
• Trustee will then deposit with the court a document listing all the company’s creditors and their claims including the securities held against those claims
• The court will then issue statement setting forth the claims of creditors which have been accepted and the court rules on objections.

LIQUIDATION PROCEEDING (WINDING-UP OF THE BUSINESS)

Under UAE Law, liquidation and dissolution of company is a process of bringing a business to an end. This is a tedious process as this involves liquidating the shares and assets, collecting debts and paying the creditors’ or discharging liabilities towards creditors. A Company may be dissolved on any of the following grounds:
• Depletion of company’s assets which renders the remaining assets of the company unbeneficial
• Expiry of the term of the company as specified in its constitutional documents
• Fulfillment of the company’s objectives as stated in its memorandum of association
• Amalgamation of the company
• Shareholders decision as set out in the company’s memorandum of association

Initial step in liquidation proceeding must be initiated by publicly declaring it through registration in the Commercial Register and publication in two local daily Arabic newspapers.

Subsequently, a liquidator will be appointment (could be by shareholder’s decision or by court order) primarily to ascertain the company’s assets and liabilities. This will in effect vest all the company’s board power in the liquidator, this includes the ability to commence or defend legal claims and to take steps necessary for the protection and preservation of the company’s assets.

Liquidator will notify all known creditors to submit their claims and for unknown creditors, notice will be made by publication in two local daily Arabic newspapers. Creditors are given 45 days from notice to present a claim or any debt disputed.

Company assets will be liquidated accordingly (payment of creditors / shares distribution to shareholders ratably. Final account will be submitted by the liquidator and upon ratification of the shareholders, liquidation will cease and will be noted on the Commercial Register. The company will then be struck off the Commercial Register.

AL REYAMI ADVOCATES ARE DEDICATED PROFESSIONALS WHERE YOU CAN GET IN TOUCH WITH FOR INITIAL CONSULTATION. WE CAN GUIDE YOU THROUGH ALL STEPS AND PROVIDE YOU UTMOST LEGAL ASSISTANCE THROUGHOUT THE PROCESS.

ESTABLISHING A COMPANY IN DUBAI: DO YOU NEED A LAWYER?

Posted by administrator on March 4, 2020

Planning To Start A Company In Dubai? How Dubai Business Lawyers Can Help

Dubai, being once known as a desert city and now a city of endless possibilities, is undeniably, extravagant and promising. Its emergence as a commercial hub over the last 15 years has been way too rapid that it is now among the easiest and fastest to set up a business globally.

Launching a business in the region, whether branching off an existing company as part of a geographic expansion strategy or starting out a completely new different enterprise can be as fast as a flash.

In a week or so, you will be able to get your business ready with just a few ‘must-do’ and ‘must-considered’ steps.

First, you must identify the correct type of your venture. This will determine the category of your business license, which will be reflected in the trading name.

Second, the activity your business covers also defines your business structure and type of license.

Third, most of the Expats who are having a 100% ownership of the company, establish their business in a Free zone Authority where minimum official procedure and duration is needed; hence the process is comparatively straightforward.

Setting up a business in Mainland Dubai, on the other hand, requires a trade license from the Dubai Economic Department. This license requires you to have a partnership with a UAE national, who has to compulsory hold at least 51% of the total equity of the company.

Lastly, you must consult with a legal counsel in Dubai UAE to have all your legal documents (Memorandum of Association) assessed. When organizing a business, nothing is as vital as priming your paperwork as this will determine whether your company will operate in terms of profit or loss.

From business opportunities to enterprises in all sizes clearly manifest the rise of Dubai, from a desert city to a city of endless possibilities.

Are Interest Provisions In A Loan Agreement Valid In The Arab Region?

Posted by administrator on March 14, 2019

Business Lawyers In Dubai – Drafting Loan Agreements

The topics regarding loan interest rates and usury in relation to lending activities in the Middle East Region are in themselves a slippery slope area and must be approached with the necessary caution. Given this delicate issue, one would question: are interests on loans illegal in the Arab Region.

To answer the question, it is best to understand first the belief behind the subject. According to Islamic teachings, interest and usury are based on the concept of “riba”, which literally means “excess or addition”, and the same is outlawed under the Sharia Law as grounded on the principle that profiting from lending money is considered “haram” or forbidden.

In today’s modern society, the prohibition against interest is generally applied to loans between individuals.

On the other hand, lending activities between two companies or between a corporate entity and an individual may not be included in the ambit of the prohibition.

Under UAE Law, the civil courts shall be the final arbiter of controversies regarding the validity or invalidity of interest clauses in a loan agreement. This goes without saying that any creditor may institute a case to collect on a loan agreement but it is within the discretionary powers of the court to accept these provisions relating to interest, surcharges, and penalties.

Noteworthy as well is the fact that a specific UAE Law deals with the obligation to pay interest and penalties. Under UAE Federal Law No. (18) of 1993 or the Commercial Transactions Law: it is stated under “Art. 76: A creditor is entitled to receive interest on a commercial loan as per the rate of interest stipulated in the contract. If such rate is not stated in the contract, it shall be calculated according to the rate of interest currently in the market at the time of dealing, provided that it shall not exceed 12% until full settlement.” and “Art. 88: Where the commercial obligation is a sum of money which was known when the obligation arose and the debtor delays payment thereof, he shall be bound to pay to the creditors as compensation for the delay, the interest fixed in Articles (76) and (77), unless otherwise agreed.”

Given these particular provisions that explicitly provide legal bases for the collection of interest and surcharges, a creditor is assured that he is protected under relevant legislation.